The Effects of Culture on Transaction Costs and Competitive Advantages of the Society

Abstract

The paper deals with the issue of measuring culture and the economic effects of culture. Ten main instruments of measuring culture are systematized in the paper. 47 cultural dimensions are divided into six groups, describing the attitude toward: (1) time, (2) social interactions, (3) rules, (4) social activities, (5) social roles and (6) communication. Then all the cultural dimensions are divided into three groups, according to the relative effect on economic interactions. The structure of transaction costs and the set of competitive advantages, based on cultural dimensions are analyzed for the three most significant groups of cultural dimensions. The suggested approach can be useful for institutional design and policy advice aiming at the increase in competitiveness of the country and the raise in efficiency of formal and informal institutions on micro and macro level.